PM offers US tech firms tax cut in return for lower Trump tariffs

Major US technology companies have been offered a significant tax cut by Keir Starmer in return for lower tariffs from Donald Trump's administration as the UK government braces itself for a global trade war.

- Pippa Crerar Heather Stewart Richard Partington

The Guardian understands the UK government is willing to reduce the headline rate of its digital services tax (DST) in an effort to placate the US president, while at the same time applying the levy to companies from other countries.

The move, which would represent a significant concession to US tech giants, comes after the prime minister decided not to ditch the tax entirely as it currently raises £800m a year and government finances are already stretched.

As the White House prepares to impose global trade barriers that could throw Labour's tax and spending plans into chaos, experts warned that Trump's 25% levy on car imports alone could put 25,000 UK jobs at risk.

The president signalled the punitive 25% tariff on all cars imported to the US last week, as part of the buildup to a historic statement in the White House rose garden today. When he addresses the nation on what the White House is calling "liberation day", Trump is expected to slap tariffs on imports from scores of rival economies - though it remains unclear whether these will be uniform or vary by country.

Major economies including the EU are then expected to retaliate with their own tariffs - while simultaneously negotiating in the hope of winning exemptions. The UK has not so far threatened to hit back, though Starmer has said he is "keeping all options on the table".

Downing Street sources confirmed the UK had now reached broad agreement with US counterparts on a trade deal focusing on technology, which it hopes will help the UK secure a carve out from tariffs. Talks between officials will continue.